Spring 2000
U n i v e r s i t y o f M i c h i g a n B u s i n e s s S c h o o l
Plus: Your Customers are Key Collaborators by V. Ramaswamy
Walking the Talk:Walking the Talk: Sam Zell and Ann Lurie
Invest in Entrepreneurial Studies
Save on taxes. Live forever. Interested? With a Planned Gift you can leave a lasting legacy at the
University of Michigan Business School. In addition, such gifts may offer certain tax benefits.
For more information, call Barbara Ackley at 734-763-5775 or return the business reply card.
F E A T U R E S
28 Tough Guy Sam Zell Puts His Money Where His Heart Is Sam Zell says there are nine personal characteristics essential to the successful entrepreneur; his $5 million gift to the Business School aims to foster those characteristics on a large scale.
31 Devoted Mother, Committed Philanthropist Ann Lurie’s deceased husband, Robert H. Lurie, wished to further the study of entrepreneurship at the University of Michigan Business School. With her $5 million gift, his wish comes true.
34 Entrepreneurship in Action: Michigan Students Lead the Charge Entrepreneurial studies have become one of the most popular fields among business school students nationwide. Learn what Michigan is doing and why.
P H O T O S T O R Y
20 Reunion ’99 I N T E L L E C T U A L C A P I T A L
11 Seismic Shift: Think of Customers As Collaborators Radical as it may sound, Venkatram Ramaswamy says anyone who is selling anything in the new economy needs to think of the consumer as a key collaborator in product development.
D E P A R T M E N T S
3 Across the Board GeoCities’ David Bohnett… Ford’s Jacques Nasser…Taxes and Campaign 2000…Citizens Rank Uncle Sam…C. K. Prahalad in Taiwan and more…
9 Quote Unquote Who is saying what—and where.
13 Faculty Research In the Know on IPOs Theresa Welbourne finds HR strategies predict long-term survival of start-ups. PLUS: A list of recent journal articles written by University of Michigan Business School faculty and how to obtain copies.
15 Ovation Everything’s Coming Up Roses: Keith and Valerie Alessi Renovate the Courtyard
Alumni and Friends Honor Gilbert and Ruth Whitaker
18 Alumni at Large “Give Me Equity or Give Me Death”: a profile of Jeff Rich, BBA ’82
In the Swing of Things: Elaine Crosby, BBA ’80, drives her career in the LPGA
37 Alumni Activities Club news from Chicago, Detroit, Los Angeles, New York, San Francisco, the Twin Cities, France and Thailand.
39 Class Notes The goings-on of friends and colleagues
45 Obituaries
47 Alumni Network Update Strengthen ties with the University of Michigan Business School: Complete and return your update form today!
Cover photo by Michael J. Schimpf
Dividend 1 SPRING 2000
Spring 2000
Dean: B. Joseph White; Senior Associate Dean: Susan J. Ashford; Associate Deans: Gautam Kaul, F. Brian Talbot
Editor: Cynthia Shaw; Class Notes and Copy Editor: Fred P. Wessells Contributors: Claudia Capos, Eldonna May
Editorial Assistants: Mary Joslyn, Diana Munoz Designer: Blue Pencil Creative Group, Ltd.
Chief Photographer: Michael J. Schimpf; Photographer: Bill Wood Copyright ©2000 The University of Michigan Business School. This publication is produced by the Office of Communications and made possible through the generosity of private donations.
University of Michigan Business School Web site: www.bus.umich.edu
701 Tappan Street
Ann Arbor, Michigan
March 2000
Dear Business School Community,
I am writing to inform you of my plans to complete my second five-year term as dean of the University of
Michigan Business School next year (2000-2001) and then undertake new professional challenges. Accordingly, I
have communicated this decision to Provost Nancy Cantor and President Lee Bollinger.
Serving as dean of our School has been my dream job. I have been deeply honored, challenged, and gratified
to have this wonderful opportunity to work with and for all of you.
I had long planned to serve as dean for a decade. By mid-2001, I will have been dean for eleven years and in
the senior leadership of the School for fourteen years. I will be ready at that time to pass the baton to my successor.
I want you to know how grateful I am to our faculty, students, staff, alumni, generous donors, corporate
friends, my dean colleagues, and Nancy and Lee and their predecessors for the tremendous support they have
provided to the School and to me personally.
It has been a joy for me to participate in the innovations and improvements in our programs, and in the
creation of the William Davidson Institute, the Joel D. Tauber Manufacturing Institute, the Frederick A. and
Barbara M. Erb Institute, and the Samuel Zell and Robert H. Lurie Institute for Entrepreneurial Studies.
It has been gratifying to honor our faculty with 26 new named, endowed professorships, to double our annual
expenditures on student scholarships, and to build Sam Wyly Hall.
It has been remarkable to see the School’s endowment increase from $40 million to nearly $150 million
between 1990 and 2000. And yes, we’ve had more than our share of victories in the unscientific but nonetheless
consequential ratings and rankings of the world’s top business schools.
Leadership work is easy if you love your institution and cherish those with whom you work. For me, both have
been true during the last decade.
We have much to do in the coming year to maintain and build scholarship, recruitment, education and
development programs, facilities and global reach, financial strength, and our leadership as an innovator. The
School’s leadership team and I will work aggressively on making our School even stronger in each of these areas.
While I cannot be certain what my next professional challenge will be, I am deeply drawn to faculty work and
to continuing my membership in the Business School community. What I know for certain is how important new
challenges are to each of us as the key to continued growth, learning, and excitement and energy about work.
The University of Michigan has an established and effective process for selecting deans. I expect that our
School will be very attractive to outstanding candidates. As I’m sure you know, I have tremendous confidence in
the strength, momentum, and future promise of this institution.
With warm and grateful regards,
B. Joseph White
Entrepreneur of the Year
GeoCities Founder David Bohnett Tells His E-Story E-business success hinges on under-
standing how the Internet is changing people’s behavior and building innovative business models to capitalize on those be- havioral changes, says GeoCities founder David Bohnett, MBA ’80.
A rapt audience packed Hale Auditorium last fall to watch Bohnett receive the Uni- versity of Michigan Business School’s 1999 Entrepreneur of the Year Award and hear him deliver the keynote address at the Fourth Annual Entrepreneurs Forum.
“The Internet, though still in its infancy, is creating new markets and business opportu- nities for those willing to embrace fast- paced technological advances,” he said. “By all accounts, GeoCities shouldn’t exist. But we had an idea, an opportunity, an environ- ment and a platform on which to build.”
Bohnett, now 43, pioneered the concept of providing free home pages to Internet users. In 1994, GeoCities was a Web-based start-up company. By 1999 Yahoo! Inc. had acquired the company for $3 billion.
In creating GeoCities, Bohnett pioneered a new business model that structured online neighborhoods around areas of common in- terest to participants. He provided free tools
and space for users to create their own Web pages and interact with one another. This strategy proved to be a winner among users and among advertisers who jumped at the chance to promote their wares to self- segregating groups of like-minded people.
Bohnett attributes his achievements to innovative thinking. “Entrepreneurs need to ask: ‘How can I look at things differ- ently?’ Not, ‘How can I create a business that does the same thing, except on the Internet?’ It is important to understand what is driving the change in the Internet,” he said, “and then to build business models around that.”
Obtaining venture capital often is a stumbling block for start-up companies, he added. After sinking his entire net worth— $350,000—into his fledgling enterprise, he knocked on doors for two years in search of investors.
In early 1996, he convinced CMG (now CMGI Inc., an Andover, Maryland-based corporation that develops and operates In- ternet companies) to purchase half the company for $2 million. GeoCities went public in August 1998.
Bohnett now heads his own investment company, Los-Angeles-based Baroda Ven- tures LLC, and he has founded and serves as executive director of the David Bohnett Foundation, a nonprofit grant-making or- ganization that works to improve society through social activism.
Bohnett predicted the Internet’s strengths—the elimination of time, the elimination of inefficiencies, the lack of regulation and the lack of natural bound- aries—will foster tremendous changes in business practice, including the eventual collapse of intellectual properties. Fixed pricing will give way to dynamic, variable pricing in real time. Even education will shift its emphasis from basic information gathering to teaching thought processes and methodology.
Other factors fueling the Internet revolu- tion are increased bandwidths, the prolifer- ation of Internet appliances, diminished dominance of Microsoft Windows and the migration of software applications to cen- tral servers. But it is talent, he said, that drives the Web: “There’s a lot of money out there, especially in Silicon Valley, but it’s re- ally the people who make the difference.”
To read an extended interview with Bohnett, visit www.bus.umich.edu/e-business/.
Auto Industry
Customers Will Design New Cars Says Nasser Technological advances are compelling
automotive manufacturers and other “nuts-and-bolts companies” to rethink their business models on virtually all levels, Ford Motor Company CEO Jacques Nasser told incoming MBA students at the Leader- ship Development Program’s welcome ad- dress last August.
Last fall, Ford announced it was part- nering with Microsoft Corp. to sell build- to-order cars to customers over the Inter- net via Microsoft’s CarPoint auto-sales Web site. Nasser estimated 40 percent of Ford customers now use the Internet to obtain information about car products and pric- ing, a trend that will continue to grow. He predicted in 20 to 30 years only half the dealerships in business today will exist as owner-operated enterprises.
In addition, consumers are demanding— and auto companies are installing—more electronic equipment on their vehicles than ever before. “More and more, the automo- bile is going to be an extension and reflec- tion of the technology consumers now get in their offices and homes,” Nasser said.
On the supplier side, Ford has experi- mented with a 24-hour online bidding proc- ess, producing $30 million in savings thus far. Electronic bidding could be expanded to the company’s entire $50 billion global ma- terials purchasing operation, he said.
In a parting comment, Nasser gave career advice: “Choose something you have energy around, something you are passionate about, something you bring great strength and talent to and something that can do good for the community and society.”
Dividend 3 SPRING 2000
Acer CEO: Global Partnerships = Global Success Cooperation, rather than competition,
is the key to creating win-win situa- tions for global companies in the high-tech industry, Acer Group Chairman and CEO Stan Shih told a Dean’s Seminar audience last fall.
Shih said because the Internet has re- shaped the way business is conducted throughout the world, it is virtually impos- sible for any country or company to com- pete effectively without forging strategic global alliances. “In the technology busi- ness, you need a partner to share informa- tion and reduce the costs associated with global competition,” Shih said.
Acer is a $6 billion company, specializing in the development and production of microprocessors. It is also the world’s third- largest producer of personal computers, with locations in nearly 40 countries. Shih is a co-founder of the Taipei-based company and a member of the Business School’s Visiting Committee.
“The challenges for U.S. and Asian com- panies are quite different,” he said. In an effort to reduce costs and become more globally competitive, American technology companies are transferring their manufac- turing operations offshore to locations in Asia, and focusing on new areas, such as software, service and innovation.
Asian companies face the challenge of serving customers on a localized basis while trying to extend their reach to foreign mar- kets on a global scale, he said. Because mar- keting products in a developed country is not easy for Asian companies, many are doing original design manufacturing (ODM) rather than promoting their own brands.
Asian and American firms stand to bene- fit from partnerships with companies pos- sessing obvious and complementary strengths, Shih said. He speaks from expe- rience: His strategic investments in Silicon Valley high-tech companies and alliances with major U.S. companies have helped Acer develop and refine its products for competition on a global scale.
Executive Education
Quality Learning Online: New Partnership Makes It Possible Web-based management training will
be available this summer thanks to a new partnership between the University of Michigan Business School and FT Knowl- edge, a division of the international media
company Pearson plc, whose holdings in- clude the Financial Times, Penguin Books and a major interest in The Economist.
The programs—Finance for Non- Financial Managers, Sales Management, Marketing for Non-Marketing Managers and Basic Management—will be based on the Executive Education offerings of the same names. Effective use of advanced technologies will enable participation from anywhere in the world yet maintain tradi- tional components of classroom learning such as interaction with the faculty in- structor and one’s classmates. Class size is limited to 50 students.
“This partnership is ground-breaking in both its approach and the combination of its assets,” says B. Joseph White, dean. “This is the first time a top business school has part- nered with a multi-media company.”
FT Knowledge is expert in developing course content for a variety of media and has an established infrastructure to deliver and market programs internationally. The University of Michigan Business School’s Executive Education Program is not only the largest provider of executive training programs in the world but also consistently rated one of the two best providers by Business Week magazine.
The first courses will be launched this summer and will be live for a two-month period. Students may proceed at their own pace with regular interaction from faculty. The four programs under development will each be equivalent to a one-week, full- time, on-campus program. The programs will be marketed primarily to companies.
For more information, visit www.bus. umich.edu.
Dividend 4 SPRING 2000
The Alumni Society Board of Governors
welcomes its new members: Daniel J. Hennessey, MBA ’81, general partner, Code, Hennessey &
Simmons, Chicago David B. Kaplan, BBA ’89, partner, Apollo Advisors, LP, Los Angeles Jodi A. Klein, MBA ’93, senior director, marketing, Visionary Design
Systems, Santa Clara, Calif. Jane L. Okun, MBA ’89, executive director, investor relations, MediaOne
Group, Englewood, Calif. Stephen H. Staelin, MBA ’69, partner, Ernst & Young LLP, Toledo, Ohio
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Business in Asia
Rosenthal Takes E-Commerce to China Imagine harnessing the vast Chinese ex-
port market and making it user-friendly for Western consumers. That’s exactly what Thomas Rosenthal, MBA ’95, and two partners are doing. They have forged a first-of-its-kind al- liance with the Chinese government and global communications/trade companies such as Motorola and SGC to form MeetChina.com, an Internet portal site sell- ing the goods—raw mate- rials, components and finished products—of 15,000 mainland compa- nies to buyers in the West.
“Currently between 50,000 and 75,000 Chi- nese firms are on the Net but do not have their own page,” Rosenthal says. “It is like a telephone book with dated numbers, they are very hard to find.”
Rosenthal, who also has a master’s de- gree in Chinese Studies and is a former business development manager of China Operations for Ford Motor Company, is president of U.S. Business Network Inc., which has invested millions into MeetChina. This new Web firm is China’s first and only wholly owned foreign enterprise licensed to conduct business on the Internet.
In actuality, MeetChina is a business-to- business database showcasing Chinese manufacturers and the products they have for sale. U.S. Business Networks operates the site, which involves investigating the business histories and credit worthiness of the mainland companies before allowing them to participate and, once qualified, providing translation and interpretation services, and arranging online meetings be- tween buyers and sellers.
“Through our system, companies will have their own site and will be able to con- tact customers directly,” Rosenthal adds. “Buyers will be able to choose among a suite of trade services such as guaranteed quality, easy pay and to-the-door shipment. The Internet will erase the differences be- tween international and domestic trade.”
Mainland companies pay an annual service fee of $3,000, which is shared be- tween U.S. Business Network and the six ministries of the Chinese government or other partners that market the site.
Rosenthal was on campus in January to participate in the Business School’s 10th Asian Business Conference as a guest
speaker for the e-commerce panel discussion.
“People who are concerned with quality of life, who don’t like to live with uncertainty or don’t have a par- ticularly high tolerance for pain
shouldn’t do this kind of work,” Rosenthal says.
He, clearly, thrives on the challenge and was pleased to find an audience of like-minded individuals at the e-commerce dis- cussion. “There were a lot of folks who have ex-
perience in China. They have their degrees from Michigan and work expe- rience abroad. If they have the determination
and are willing to make the sacrifice, they have a chance to do something really great.”
To read an extended interview with Rosenthal, v isit www.bus.umich.edu/ e-business/.
Campaign 2000
Web Site Assesses the Tax Debate If campaign rhetoric, evasive answers and
shifting policy statements on tax issues are making it difficult to distinguish the claims of one politician from another in the 2000 presidential campaign, the Office of Tax Policy Research offers a helpful resource.
Its Campaign 2000 Web site provides an easy-to-use guide to the tax positions of the presidential candidates and gives non- partisan analysis of taxation issues fre- quently in the news—the flat tax, tax reform, Social Security, the budget surplus and others. Full texts of the candidates’ re- marks on tax issues are available, making it possible to compare the positions of opposing nominees and identify discrepan- cies, or reversals of previous campaign positions, on controversial tax matters.
Earlier this year, the Office of Tax Policy Research, together with the Business Eco- nomics and Public Policy Group and CIGNA Corp., presented forums on three issues cen- tral to the presidential campaign: health care, tax policy and the stock market.
To visit the Campaign 2000 Web site or learn more about the Office of Tax Policy Research, visit www.taxpolicyresearch. umich.edu.
Dividend 5 SPRING 2000
ACROSS BOARDTHE
Live from the Mendelssohn Theater: The second segment of a new business series airing nationally on PBS television stations in early 2000 was taped before a University of Michigan Business School audience in December. The series, CEO Exchange, is hosted by AT Kearney. William S. Stavropoulos, CEO of Dow Chemical Company, and David Perry, CEO of Chemdex, took questions from B-School faculty. Jeff Greenfield, a CNN commentator, served as moderator. Check your local listings for dates and times.
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Government
Winograd Leads Charge for Reinvention It wasn’t until the results of the American
Customer Satisfaction Index, rating the quality of federal government services, were about to be released that Morley Winograd made mention of his Michigan affiliation.
The 1963 BBA graduate is a senior advi- sor to Vice President Al Gore and heads the National Performance Review, a Clinton- Gore initiative to reform the way the fed- eral government works. This initiative in- cludes the Partnership for Reinventing Government. It was at the request of the Partnership that the General Services Ad- ministration funded the first-ever study done to measure citizens’ satisfaction with the government. (See adjacent story.)
“Large majorities of Americans say they don’t feel close to or connected to govern- ment. They think of it as ‘the’ government not ‘their’ government,” Winograd says. To combat that feeling, the National Perform- ance Review has, among other things, de- veloped REGO, an online magazine that puts a human face on governmental change.
“REGO is an excellent way for people to relate to some of the good things agencies do every day—from educating kids about food poisoning to helping people protect their homes during tornadoes,” he adds.
Winograd joined Vice President Al Gore’s staff in 1997 as a senior policy advisor and director of the National Performance Re- view. Years earlier, his innovative approach to sales and his creation of the AT&T Uni- versity of Sales Excellence program, which involves empowering sales teams to increase the success of each customer’s business, won national recognition in Peter Block’s
book, Stewardship, and Stan Davis and Jim Botkin’s book, The Monster under the Bed.
Winograd has served in various leader- ship capacities within the Democratic Party in Michigan and at the national level. In 1997, he got the call from the White House.
Customer Satisfaction
Citizens Rank Uncle Sam How satisfied are the American people
with the services and information provided by the federal government? Until recently, no one really knew.
All that changed in December 1999 when the University of Michigan Business School, in partnership with the American Society for Quality and Arthur Andersen Government Services Consulting, released its first-ever survey of consumer satisfac- tion with government agencies.
The widely publicized results of the American Customer Satisfaction Index (ACSI) showed Uncle Sam’s performance was rated slightly lower (with an overall score of 68.6 out of a possible 100) than that of the private business sector (which had an average score of 73).
“We found as much of a range in the sat- isfaction ratings among federal government agencies as among the 170 corporations we measure,” says Barbara Everitt Bryant, managing director of ACSI and former di- rector of the U.S. Census Bureau. “Not un- expectedly, agencies that give grants or offer free or low-cost services got higher satisfaction ratings than regulatory or tax- collection agencies.”
Health and Human Services’ Administra- tion for Families and Children (which runs Head Start) posted a strong 87 score. The Internal Revenue Service, the annual neme- sis for most Americans, racked up mixed re- views. Traditional tax filers gave the agency a 51 and electronic filers gave it a 74.
Since 1994, the ACSI has produced quarterly indexes that measure how con- sumers feel about the products and services they purchase from U.S. businesses. Last year’s initiative to measure the govern- ment’s performance was funded by federal agencies through the General Services Ad- ministration at the request of the National Partnership for Reinventing Government. The funding provides for a repeat survey at the end of this year.
For more information, see www.umich. edu/research/nqrc/acsi.html.
Dividend 6 SPRING 2000
ACROSS BOARDTHE
Female hockey players teamed up last November to form the first-ever University of Michigan Business School women’s hockey team and placed second in a Michigan-sponsored tournament. Playing at Yost Ice Arena, the 12-member team defeated Cornell University and gave the University of Chicago a good run for its money.
“There has been interest in women’s hockey for several years, but the obstacle has been funding,” explains Kristen L. Bermudez, a second-year MBA student who spearheaded the team’s organizing efforts.
Bermudez approached Dean B. Joseph White and Senior Associate Dean Susan J. Ashford, who agreed to help start an equipment pool. The rest is hockey history.
The team has accepted tournament invitations from Harvard Business School and Tuck School of Business at Dartmouth, in hopes of snagging a trophy or two in 2000. Stay tuned.
Morley Winograd
Bullet Points The quest for ever-more re- sponsible business brought people from more than 30 business schools to Ann Arbor to attend the 1999 Net Impact Con- ference. Michigan hosted the week-long conference, which drew speakers from the University and business communities, in- cluding Linda Chavez-Thompson, executive VP, AFL-CIO; Gary Hirshberg, CEO of Stonyfield Farm; Eleanor Josaitis, executive director of Focus:HOPE; and Michigan’s Business School Dean B. Joseph White. We know the way to San Jose. Planeloads of students jetted to the high- tech center to participate in the annual West Coast Forum last November that featured a networking reception and panel discussion by alumni at start-up companies. Andersen Consulting sponsored the event; 30 compa- nies participated, including Alta Vista, HP, Excite@Home and Peoplesoft. Panel speak- ers were Renee Esquivel, MBA ’96, VP of business development for ThePerk.com Gourmet Inc.; Greg Maletic, MBA ’95, executive VP and co-founder of Zero G Software; Joel Martin, MBA ’93, presi- dent, CEO and co-founder of Quantum Dot Corp.; and Joe Sipher, MBA ’96, Palm Fellow and entrepreneur.
The Second Annual NYC En- tertainment and Sports Forum drew 60 students to Manhattan in Novem- ber. NBC hosted a reception that included representatives from NBC, Entertainment Weekly, ESPN, the NFL, the NBA, General Electric, Good Times Entertainment, J.P. Morgan, McGraw-Hill Companies, Mira- max Film, Mitchell Madison, Qwest, Show- time Networks and Viacom. Graduates Larry Rutkowski, MBA ’81, NBC’s sen- ior vice president for business development; Marlo Scott, MBA ’99, NBC’s manager of business development; Howard Handler, BBA ’83/MBA ’84, the NFL’s senior vice president for marketing and fan promotion; and Ken Todd, MBA ’96, Showtime’s di- rector of program information and analysis, were particularly helpful to the students. Successful Partnerships for Strong Communities were the focus of the Nonprofit and Public Management Center’s November conference. Eli Segal, president and CEO of The Welfare to Work Partnership, gave the keynote address. The center, established in 1997, is a resource center and clearinghouse for students, fac- ulty and researchers interested in nonprofit and public management. Janet Weiss, the Mary C. Bromage Collegiate Professor of Organizational Behavior and Public Policy, directs the center.
Kudos
Smart Money Names Alger Fund Manager of the Decade David Alger’s no-load Spectra fund has
delivered a total annualized return of nearly 26 percent during the 1990s, mak- ing it, according to Smart Money magazine, the most successful domestic equity fund of the decade. In its first issue of the new mil-
lennium, Smart Money called David Alger, MBA ’68, the president, CEO and chief investment officer of Fred Alger Manage- ment, “the decade’s top-performing diver- sified fund manager.”
Spectra’s success isn’t an isolated achievement. Alger funds frequently beat the Standard & Poor’s 500-stock index and are rated top in their class.
In 1971, Alger joined the firm founded by his brother. Since then he has served as an analyst, director of research and portfo- lio manager. The firm, which has consis- tently stressed thorough research and rig- orous analysis as part of the investment process, employs 18 full-time researchers to follow 1,400 companies.
Not a keeper of secrets, Alger is a fre- quent guest financial analyst for CNN, FNN and CNBC. And, nearly a decade ago, he shared his investment strategy with readers in his 1991 book, Raging Bull: How to Invest in the Growth Stocks of the ’90s published by Business One Irwin.
Dividend 7 SPRING 2000
ACROSS BOARDTHE
MBA Class of 2001 meets challenges head-on: Bob Knowling, CEO of Covad Communications, a West Coast telecommunications company, pledged $462,315 to Focus:HOPE, a Detroit nonprofit organization, on the condition all 440 class members participate in its 10th Annual Walk for Justice held last October.
Knowling made his pledge during his Global Citizenship Day address, which concluded a day of student volunteerism at nonprofit organizations. Eighty MBAs had worked at Focus:HOPE, which provides educational opportunities for at-risk adults, operates a food bank and offers other support services for inner-city residents.
On the appointed day, 550 Business School students, faculty, staff and family members joined in the walk that drew nearly 10,000 participants. Knowling immediately made good on his pledge and issued another: He would give another $500,000 to Focus:HOPE if Business School students donated 500 hours of volunteer time to the organization. They already have.
David Alger
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Partnership
Executive Education Forges Relationship with Aspire Academy In a move to strengthen the business en-
vironment and assist Taiwan’s globaliza- tion efforts, Stan Shih, chairman and CEO of the Acer Group and member of the Uni- versity of Michigan Business School’s Visit- ing Committee, has launched an executive training center in Taipei and invited the Business School’s Executive Education fac- ulty to provide some of the courses.
Called Aspire Academy, the new educa- tional center offers training to senior and mid-level executives at Asia-based firms and multinational corporations located in the region. Aspire Academy is a facet of Acer Foundation, the philanthropic arm of the Acer Group—the world’s third-largest producer of personal computers, with headquarters in Taipei and locations in nearly 40 countries. Shih is a co-founder of the $6 billion company, which special- izes in the development and production of microprocessors.
Through the partnership, Aspire Acad- emy gains on-site access to the programs of Michigan’s Executive Education Center, long considered a world leader in executive training. At the same time, Executive Edu- cation faculty gain greater entry into Asian business operations, an opportunity that promises to increase Michigan’s knowledge of the region.
“Taiwan is considered a manufacturing center and soon will be considered a knowledge center,” says C. K. Prahalad, the Harvey Fruehauf Professor of Business Administration. “In so many ways, it is a microcosm of the region. Our association with Aspire enriches our ability to learn, re- search and train students to be new age managers.”
The academy officially opened last October. P. K. Jiang, Taiwan’s minister of economic development, inaugurated the two-day event which served as the catalyst for a national debate on the future of Tai- wan’s economy. C. K. Prahalad, the desig- nated thought leader, gave two major ad- dresses. The first, “The Changing Face of Strategy: The Changing Role of the Organ-
ization,” was delivered to a sold-out audi- ence of more than 400 CEOs, senior execu- tives and academics. The second day, Pra- halad delivered “Competing for the Future: Winning Strategies in the New Economic Era.” Both speeches were covered by every major television and print news organiza- tion in the region.
“The press coverage was tremendous, unlike anything I have seen in the U.S.,” says Brian Talbot, associate dean for Exec- utive Education. “C.K.’s comments on the new economy and Taiwan’s role in it shaped a nationwide discussion. Acer ex- pects Aspire Academy to become a regional learning and research center that supports the country’s economic agenda.”
Acer Chairman Stan Shih determined Aspire’s reach: “Business has changed,” he says. “One thing that has changed most is the concept of competition. Companies are a lot more independent than before. It’s no longer a zero-sum game where if your competitor wins, you lose. We’re free to see competition as just the element that stimu- lates companies to keep improving them- selves.” (See related story on page 4.)
Arthur Yeung, PhD ’90, is president of Aspire Academy. A recognized thought leader on human resource practices, he was the founding director of the Business School’s Asia-Pacific Human Resource Partnership and its Asia-Pacific Regional Office located in Hong Kong. Executive Education faculty will deliver courses in fi- nance, strategy, human resource manage- ment/leadership and globalization.
Corporate Growth
Top Faculty Hold Summer Conference for Executives As par t of the Business School’s
ongoing “Pressing Problems” initia- tive, the Executive Education Center will host a major, five-day conference address- ing the full range of issues associated with creating and sustaining growth within organizations.
“Growing the Organization: A Confer- ence on Innovative Solutions to the Press- ing Problems of Business” is scheduled for July 24–28 in Ann Arbor. The conference will offer a series of agenda-setting presen- tations followed by action-oriented work- shops, each examining a different facet of organizational development.
Dean B. Joseph White describes this ap- proach as “blending intellectual rigor with significant practical payoff.” Each day a prominent Business School scholar will set the day’s agenda issue. Faculty include C.K. Prahalad, the strategy guru who coined the concept of “core competence,” Robert Quinn, an expert on organizational change, Noel Tichy, author of The Lead- ership Engine, Dave Ulrich, a human re- sources management strategist, and Karl Weick, author of The Social Psychology of Organizing.
Conference participants will have an op- portunity to choose which workshops they wish to attend, thereby tailoring the pro- gram content to their personal and profes- sional needs
The conference is the first of several “Pressing Problems” events that are being planned by the Business School in conjunc- tion with its new book series, “Michigan Management Series: Innovative Solutions to the Pressing Problems of Business.” The series grew out of surveying executives who identified more than 40 business issues paramount to their personal and organiza- tional success. One book will be devoted to each issue. For more information or to reg- ister for the conference, contact Heather Martinson by phone at 734-764-8430, by fax at 734-763-9467 or by e-mail at Hmart@umich.edu.
Dividend 8 SPRING 2000
ACROSS BOARDTHE
C.K. Prahalad
“The market is betting somewhere out there there’s a business model that will provide a wildly successful way to sell goods and services. I call it uncertainty rather than risk.”
Will Mitchell, the Jack D. Sparks Whirlpool Corporate Research Professor of Business Administration and professor of corporate strategy
and international business, in The Wall Street Journal article, “Are Other Industries Fair Game for Deals?” Jan. 11, 2000.
“Look outward, not inward, Professor C. K. Prahalad urges. See yourself as others see you. A vital source of strength, maybe the most vital, lies in the untapped power of your customers to exploit the Internet. The flood of product information to them, the ease with which they can sort through it and the potential they have for uniting with other Internet users all combine to shift the balance of the market power decisively toward the consumer. Prahalad maintains: ‘We are saying that consumers are going to drive the firm.’”
Fred Andrews in The New York Times Ideas into Action column, “Regarding Customers As Business Collaborators,” Feb. 9, 2000.
“We have seen a cost-cutting push in the private sector. As you do that, certainly in the labor-intensive parts of the service sector, it is very difficult to keep up the quality.”
Claes Fornell, director of the National Quality Research Center and the Donald C. Cook Professor of Business Administration, in
The Wall Street Journal article, “Survey Measures Satisfaction with Federal Services,” Dec. 13, 1999.
“Meanwhile, government agencies appear to be doing a little better than expected. ‘Expectations were often lower than the perceived quality of the service. It’s almost as if people were pleasantly surprised by what they got from the government.’”
Barbara Everitt Bryant, managing director of the National Quality Research Center in The Wall Street Journal article, “Survey Measures
Satisfaction with Federal Services,” Dec. 13, 1999.
“Continuous experimentation—and the development of new and innovative features—play an important role in shaping consumer perceptions of quality in software. As software permeates into products ranging from automobiles to hand-held devices, the new meaning of quality will be based on how products and vendors learn from customer interaction and adapt to the changing needs of individual consumers.”
M. S. Krishnan, assistant professor of computer and information systems and winner of the 1997 Best Dissertation Award from the International
Conference on Information Systems, in the Quality Progress magazine article, “21 Voices for the 21st Century,” January 2000.
“Claes Fornell believes the quality of economic output is as important as the productivity of economic resources, and attempting to improve one without improving the other could eventually harm economic growth because consumers could become disenchanted and curb their spending.”
Melanie Trottman, in The Wall Street Journal article, “Satisfaction with Retail, Financial Companies Slips,” Feb. 22, 2000.
“A merger’s initial management structure never lasts. Whether it gets changed in 90 days or six months, there’s a sorting out of who the key players are and what positions they’re going to play.”
Noel Tichy, director of Global Leadership and professor of organizational behavior and human resource development,
in The Wall Street Journal article, “What’s Up, Dot? Can Time Warner Click with AOL? Here Are Eight Things to Watch,” Jan. 14, 2000.
“A decade ago many Central Europeans thought they would catch up with the EU by the end of the century. But they underestimated the difficulty of changing from one system to another.”
Jan Svejnar, director of the William Davidson Institute and the Everett E. Berg Professor of Business Administration at the University of Michigan
Business School, in the Business Week magazine article, “How Far, How Fast? Is Central Europe Ready to Join the EU?” Nov. 8, 1999.
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Q U O T E U N Q U O T E
“Don’t take entrepreneurship for granted. It can sound really glamorous, but this is tough stuff. If you enjoy consistency, if you enjoy something that says this is my path, this is how I get feedback, this is how I know where I am, this is where I know my next step is, this is where I know my progression is and where I know I’ll end up in the next few years, then don’t think about entrepreneurship. You should go to a large organization that can provide you with a supportive environment.”
Rick Snyder, MBA ’79, former president and COO of Gateway Inc., and founder and president of Avalon Investments Inc., an Ann Arbor-based venture capital firm,
at the Entrepreneurial Evening sponsored by the Alumni Club of Detroit.
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Call for Nominations Each year the UMBS Alumni Society Board of Governors recognizes the accomplish- ments of outstanding alumni with a series of awards. The Awards Committee of the Alumni Board invites the Business School Community to participate by submitting nominations for the following awards.
Bert F.Wertman Alumni Service Award Established in 1989, this award recognizes an alumnus or alumna of the Business School for outstanding service to the School or to the University. The award was established in honor of Bert F.Wertman, who served for more than sixty years as President of the Class of 1928. Through his leadership and caring, the class remained a cohesive and vital group and held a record number of continuous reunions.
Alumni Achievement Award Established in 1989, this award recognizes an alumnus or alumna of the Business School whose attainments in their professional field have brought distinction to themselves, credit to the School and benefit to their fellow citizens.
Entrepreneur Award Established in 1991, this award recognizes the accomplishments of an alumnus or alumna of the University of Michigan who has started and built a successful enterprise.
Congratulations to our 2000 Alumni Award Recipients: Richard H. Rogel, BBA ’70, Bert F.
Wertman Alumni Service Award; Stanley D. Frankel, AB ’63, MBA ’64, Alumni Achievement
Award; David Bohnett, MBA ’80, Entrepreneur Award.
To nominate an individual, you may use the nomination form on the Alumni Relations website (www.bus.umich.edu/alumni); send a letter to Alumni Relations, University of Michigan Business School, 701 Tappan,Ann Arbor, MI 48109-1234; fax a letter to (734) 763-9170; or send an email to alumni@umich.edu with the following information:
Name of the nominated individual along with his or her degree(s), year(s) of graduation, company name, business address and telephone, and home address and telephone, if known.
Your reasons for nominating the candidate for an Alumni Award, along with any supporting documentation.
Your name, degree(s) and year(s) of graduation (if a UMBS alumnus), company name, business address and telephone, home address and telephone, and email address. Please indicate whether you are a student, an alumnus, or a member of the faculty or staff.
Outstanding Alumni Awards
Nominations for 2001 Awards must be submitted by June 1, 2000.
Not too long ago, we customers had a clear role in the marketplace. It was our job to passively consume
from the choices of products and services made available to us. Sure, companies sought our feedback and offered us a vari- ety of products. But we often found our- selves compromising our wants because the products we had to choose from didn’t fit our needs.
Since the industrial age, products tradi- tionally have been designed from the com- pany’s point of view, not the customer’s experience. Not any more: Smart compa- nies are quickly realizing their customers must become their collaborators if they are to maintain long-term growth and finan- cial success.
The customization option Anyone who has recently bought a com-
puter must contend with techno-babble like RAM (no, it’s not a goat), Gig (no, it’s not a show) and MegaHertz (no, it’s not the big car-rental company). This is a per- fect example of a product designed from the company’s point of view. Should the typical consumer really have to worry about RAM or Gig or MegaHertz? This is the language of the manufacturer, not the language of the user.
If you consider yourself techno-savvy, you can visit a Web site such as Dell and order a computer that will be “customized”
for you. Customization is particularly pro- nounced over the Web, where consumers can tailor a host of products and services, from business cards to computers, greeting cards, mortgages and flowers, simply by choosing from a menu of features. Unfor- tunately, in most cases the menu is still in the company’s language and requires customers to think like the company, as opposed to the other way around.
From products to customer experiences
In a recent Harvard Business Review ar- ticle, “Co-opting Customer Competence” (January-February 2000), which I co- authored with C. K. Prahalad, the Harvey C. Fruehauf Professor of Business Adminis- tration, we discuss how a key challenge for managers is to come to grips with the fact that the product is no more than an artifact around which customers have experiences.
Companies must learn how to experience their products as customers experience them. Take, for instance, the ubiquitous re- frigerator. The choice is restricted to capac- ity, dimensions, color, freezer placement and a few pre-determined options such as ice/water dispensers, filters and racks. For the most part, the language and features are that of the company, not the customers. Some companies are now attempting to move toward customization, allowing cus-
tomers to configure their refrigerators from a menu of features.
The goal, however, should be to offer a menu of experiences, not features. Vegetari- ans, who by definition don’t eat meat, may want to experience a different kind of freezer. If a refrigerator company opens its doors to customer experiences, it would ask the question: Why not a “lazy Susan” in- side the refrigerator? Then consumers can reach all the stuff at the back—and enjoy it before it spoils.
The company that will be the most successful will be the one that co-creates engaging experiences for customers. For some, the exterior of refrigerators are “fashion appliances” to be coordinated with the decor of kitchens. For others, they are “information appliances” where infor- mation is stored and shared. Companies must learn how to innovate experiences, not products.
Jeff Bezos, founder of Amazon.com, con- siders his company to be customer-centric. He is obsessed with customers. Although this is a stretch for most organizations today, Prahalad and I argue successful companies in the future will be those that are centered on personalized experiences. Progressive companies, whether traditional or Internet, are recognizing this fundamental fact.
Customers as collaborators What will it take for a company to be
centered on customers’ experiences? For starters, it should recognize customers as collaborators. Consider Scott Adams, of Dilbert fame, who solicits and receives
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Seismic Shift: Think of Customers As Collaborators Radical as it may sound, anyone who is selling anything in the new economy (and wants to be successful at it) needs to think of the consumer as a key collaborator in product development. By Venkatram Ramaswamy, associate professor of marketing, University of Michigan Business School
I N T E L L E C T U A L C A P I TA L
Venkatram Ramaswamy
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e-mail from a multitude of individuals de- tailing ideas and “comic fodder” for his Dilbert cartoon strip. Tapping continuously into the daily experiences of individuals in their jobs is critical to keeping the cartoon strip current and fresh. Individuals—the very customers for this comic strip—are collaborators in creating its value.
Thanks to the Internet, customers have become the originators of dialogue with companies. The market is now a forum where customers are co-creators of value and a source of competence. They possess knowledge and skills, not just of the com-
pany’s products as communicated and pre- sented to them, but of how they want to experience products.
Companies must encourage an active di- alogue and mobilize customer communities to harness customer competence. Contend-
ing with customer diversity will prove chal- lenging. The successful company will em- brace this challenge as the key to a winning and profitable collaboration.
To order an electronic copy of “Co-opting Customer Competence” by C.K. Prahalad and Venkatram Ramaswamy, which appeared in the January-February 2000 issue of Harvard Business Review, visit www.hbsp.harvard.edu/products/hbr/, click on “Archives” and then click on the date of the issue. Ordering informa- tion appears at the bottom of the page.
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I N T E L L E C T U A L C A P I TA L
Time frame 1970s, early 1980s Late 1980s & early 1990s 1990s Beyond 2000
Nature of business exchange and role of customer
Customers are part of the enhanced network; they co-create and extract business and value. They are collaborators, co- developers and competitors.
Managerial mind-set The customer is an average statistic; groups of buyers are predetermined by the company.
The customer is an individual statistic in a transaction.
The customer is a person; cultivate trust and relationships.
The customer is not only an individual but also part of an emergent social and cultural fabric.
Company’s interaction with customers, and development of products and services
Traditional market research and inquiries; products and services are created without much feedback.
Shift from selling to helping customers via help desks, call centers, and customer service programs; identify problems from customers then redesign products and services based on that feedback.
Provide for customers through observation of users; identify solutions from lead users, and reconfigure products and services based on deep understanding of customers.
Customers are co- developers of personalized experiences. Companies and lead customers have joint roles in education, shaping expectations and co-creating market acceptance for products and services.
Purpose and flow of communication
Gain access to and target predetermined groups of buyers. One-way communication.
Database marketing; two-way communication.
Relationship marketing; two-way communication and access.
Active dialogue with customers to shape expectations and create buzz. Multilevel access and communication.
Persuading predeter- mined groups of buyers
Transacting with individual buyers
Lifetime bonds with individual customers
Customers as creators of value
Customers are seen as passive buyers with a predetermined role of consumption.
The Evolution and Transformation of Customers
Customers are stepping out of traditional roles to become co-creators as well as consumers of value. This table maps their evolution through three stages and several key dimensions.
Customers As Active Players
Customers As Passive Audience
become their collaborators if they are to maintain long-term growth
and financial success.
Reprinted from Harvard Business Review, January-February 2000
The following is a list of recent journal articles written by University of Michigan Business School faculty. To purchase a reprint of an article, contact MITS at the University of Michigan’s Hatcher Graduate Library: (fax) (877) 329-6487; (phone) (734) 763-5060; (e-mail) MITS.mail@umich.edu. There is a $12 fee per article and, on occasion, an additional copyright royalty.
Accounting Anderson, Shannon W., & Young, S. Mark (1999). The impact of contextual and process factors on the evaluation of activity-
based costing systems. Accounting, Organizations and Society, 24(7), 525–559. Anderson, S. W., & Lanen, W. N. (1999). Economic transition, strategy and the evolution of management accounting practices:
The case of India. Accounting, Organizations and Society, 24(5/6), 379–412. Frankel, Richard M., Johnson, Marilyn, & Skinner, Douglas (1999). An empirical examination of conference calls as a voluntary
disclosure medium. Journal of Accounting Research, 37(1), 133–150. Indjejikian, Raffi J. (1999). Discussion of optimal contracting, accounting standards and market structures. Contemporary
Accounting Research, 16(2). Johnson, Marilyn (1999). Business cycles and the relation between security returns and earnings. Review of Accounting
Studies, 4(2), 93–118. Lundholm, Russell, Forsythe, Robert, & Reitz, Thomas (1999). Cheap talk, fraud and adverse selection in financial markets:
Some experimental evidence. Review of Financial Studies, 12(3), 481–518. Skinner, Douglas J. (1999). How well does net income measure firm performance? A discussion of two studies. Journal of
Accounting and Economics, 26(1–3), 105–112.
Business Administration Davis, Gerald F., & Mizruchi, Mark S. (1999). The money center cannot hold: Commercial banks in the U.S. system of
corporate governance. Administrative Science Quarterly, 44, 215–239. Mizruchi, Mark S., & Fein, Lisa C. (1999). The social construction of organizational knowledge: A study of the uses of coercive,
mimetic and normative isomorphism. Administrative Science Quarterly, 44, 653–683.
Business Economics and Public Policy Butz, David Alan, et al. (1999). Trauma services: A profit center? Journal of the American College of Surgeons, 188, 349–354. Butz, David Alan, et al. (1999). Paying a premium: How patient complexity affects costs and profit margins. Annals of Surgery,
229, 807–814. Butz, David Alan. The disconnect between principal-agent theory and empirical work: A review of Bernard Salonie’s The
Economics of Contracts. The International Journal of the Economics of Business, 6, 131–140. Clyde, Paul (1999). Is it efficient to impose costs on small-volume equity traders? International Journal of the Economics of
Business, 6, 81–92. Hines, James R. Jr., & Desai, Mihir A. (1999). Basket cases: Tax incentives and international joint venture participation by
American multinational firms. Journal of Public Economics, 71(3), 379–402. Hines, James R. Jr. (1999). Three sides of Harberger triangles. Journal of Economic Perspectives, 13(2), 167–188. Hines, James R. Jr. (1999). Lessons from behavioral responses to international taxation. National Tax Journal, 52(2), 305–322. Hines, James R. Jr. (1999). The case against deferral: A deferential reconsideration. National Tax Journal, 52(3), 385–404. Lafontaine, Francine, & Shaw, Kathryn L. (1999). The dynamics of franchise contracting: Evidence from panel data. Journal of
Political Economy, 107(5), 1041–1081. Lafontaine, Francine (1999). Franchising or corporate ownership: The effect on price dispersion. The Journal of Business
Venturing, 17–34. Blair, Roger, & Lafontaine, Francine (1999). Will Khan foster or hinder franchising? An economic analysis of maximum resale
price maintenance. Journal of Public Policy and Marketing, 18(1), 25–37. Slemrod, Joel B., & Greimel, Timothy (1999). Did Steve Forbes scare the U.S. municipal bond market? Journal of Public
Economics, 74(1), 81–97.
Computer and Information Systems Gordon, Michael D., & Moore, Scott A. (1999). Depicting the use and purpose of documents to improve information retrieval.
Information Systems Research, 10(1), 23–37. Lindsay, Robert K., & Gordon, Michael (1999). Literature-based discovery by lexical statistics. Journal of the American Society
for Information Science, 50(7), 574–588. Krishnan, M. S., Ramaswamy, Venkatram, Meyer, Mary C., & Damien, Paul (1999). Customer satisfaction for financial services:
The role of products, services and information technology. Management Science, 45(9), 1194–1210. Krishnan, M. S., & Prahalad, C.K. (1999). The new meaning of quality in the information age. Harvard Business Review,
September–October, 109–118.
Corporate Strategy and International Business Coval, Joshua, & Moskowitz, Tobias (1999). Home bias at home: Local equity preference in domestic portfolios. Journal of
Finance, 54(6). Dufey, Gunter (1999). Asian financial markets: A pedagogic note. Journal of Asian Business, 15(1). Feenstra, Robert C., & Hanson, Gordon H. (1999). The impact of outsourcing and high-technology capital on wages: Estimates
for the United States, 1979–1990. Quarterly Journal of Economics, 114(3), 907–940. Hanson, Gordon, & Spilimbergo, Antonio (1999). Illegal immigration, border enforcement and relative wages: Evidence from
apprehensions at the U.S.–Mexico border. American Economic Review, 89, 1337–1357. Hanson, Gordon, & Harrison, Ann (1999). Trade, technology and wage inequality in Mexico. Industrial and Labor Relations
Review, 52, 271–288. Harrison, Ann & Hanson, Gordon (1999). Who gains from trade reform? Some remaining puzzles. Journal of Development
Economics, 59(1), 125–154.
Finance and Real Estate Bacidore, Jeffrey M., Boquist, John A., Milbourn, Todd T., & Thakor, Anjan V. (1999). The search for the best financial
performance measure. Financial Analysts Journal, 53(3), 11–20.
In the Know on IPOs Welbourne Finds HR Strategies Predict Long-Term Survival of Start-ups
Theresa Welbourne is an HR executive who knew, in order to prove her theories, she had to become an HR scholar. As an associ- ate professor of organizational behavior and human resource management, she tracks the human resource practices of initial public offering (IPO) firms and quantifies the effects of employee management strategies on firm survival (stock price growth) and financial performance (earnings growth).
“I believed I had the answer to start-up success,” Welbourne says. “My answer is people. But I did not have the details I needed, so I decided to arm myself with research that would be compelling.”
Welbourne, who earned her Ph.D. in 1992, is an expert on employee manage- ment strategies in entrepreneurial, high- growth and high-change organizations. She chose to focus her research on IPO firms because they are inherently small, and their performance varies considerably.
Welbourne needed variance to study cause and effect. “I also knew that when a firm does an IPO it has to provide lots of in- formation in the form of a prospectus,” she adds. “That information is valuable to me.”
She conducted her first IPO study in 1992 by collecting data on all 130 firms that had gone public in 1988. She studied
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Theresa Welbourne
Bhattacharyya, Sugato, & Leach, J. Chris (1999). Risk spillovers and required returns in capital budgeting. Review of Financial Studies, 12(3), 461–469.
Bhattacharyya, Sugato, & Singh, Rajdeep (1999). The resolution of bankruptcy by auction: Allocating the residual right of design. Journal of Financial Economics, 54(3), 269–294.
Capozza, Dennis R., & Seguin, P. (1999). Focus and REIT value. Real Estate Economics, 27(4), 587–619. Capozza, Dennis R., & Seguin, P. (2000). Debt, agency and management contracts in REITs: The external advisor puzzle.
Journal of Real Estate Finance and Economics, 20(2), 91–116. Kim, E. Han, & Singal, Vijaya (2000). Stock market openings: Experience of emerging economies. Journal of Business, 73(1),
25–66. Kim, E. Han (1999). The Korean financial crisis and the future of its economy. Journal of Asian Business, 15(1), 72–78. Nanda, Vikram, & Narayanan, M. P. (1999). Disentangling Value: Financing needs, firm scope and divestitures. Journal of
Financial Intermediation, 8, 174–204. Shumway, Tyler, & Warther, Vincent (1999). The delisting bias in CRSP’s Nasdaq data and its implications for the size effect.
Journal of Finance, 54(6). Thakor, Anjan V., & Boot, Arnoud (2000). Can relationship banking survive competition? Journal of Finance, 55(2). Wu, Guojun, and Bekaert, Geert (2000). Asymmetric volatility and risk in equity markets. Review of Financial Studies, 13, 1–42.
Law, History and Communication Cameron, George D. (2000). Ethics and equity: Enforcing ethical standards in commercial relationships. Journal of Business
Ethics, 23, 161–172. Fort, Timothy L. (1999). The first man and the company man: The common good, transcendence and mediating institutions.
American Business Law Journal, 36(3), 391–435. Fort, Timothy L. (1999). Business and naturalism: A peek at transcendence? Business and Society, 38(2), 226–236. Oswald, Lynda J. (1999). Insurance coverage for environmental liability: Is an administrative proceeding a suit? Real Estate
Journal, 28, 252–258. Oswald, Lynda J. (1999). Tarnishment and blurring under the Federal Dilution Act of 1995. American Business Law Journal,
36(2), 255–300. Rogers, Priscilla S. (2000). CEO presentations in conjunction with earnings announcements: Extending the construct of
organizational genre through competing values profiling and user needs analysis. Management Communication Quarterly, 13(3), 484–542.
Thomas, Jane (1998). Contexting Koreans: Does the high/low model work? Business Communication Quarterly, 61(4), 9–22. Thomas, Jane (1999). Business writing in history: What caused the dictamen’s demise? The Journal of Business
Communication, 36(1), 40–54.
Marketing Hart, Christopher W., & Johnson, Michael D. (1999). Growing the trust relationship. Marketing Management, 8, 9–22. Herrmann, Andreas, and Johnson, Michael D. (1999). Die knudenzufriedenheit als bestimmungsfaktor der kundenbindung (The
relationship between customer satisfaction and customer loyalty). Zeitschrift fur betriebswirtchaftliche Forschung, 51, 579–598. Johnson, Michael D., Herrmann, Andreas, & Bauer, Hans H. (1999). The effects of price bundling on consumer evaluations.
International Journal of Research in Marketing, 16(2), 129–142. Dube, Laurette, Johnson, Michael D., & Renaghan, Leo Mark (1999). Adapting the QFD approach to extended services
transactions. Production and Operations Management, 8, 301–317. Herrmann, Andreas, Johnson, Michael D., Gustafsson, Anders, & Huber, Frank (1999). Transformation von
kundenzufriedenheitsurteilen in produktqualitatsvorgaben (Bridging the quality-satisfaction gap: Implications for German firms). Marketing ZFP, 10(2), 117–131.
Kinnear, Tom (1999). A perspective on how firms relate to their markets. Journal of Marketing, 63, 112–114. Martin, Claude R. (1999). Effects of plain packaging on the cigarette consumption process. In J. C. Luik (Ed.), Plain packaging
and the marketing of cigarettes (Chapter 7). London: NTC Publications Ltd. Martin, Claude R., Horne, David A., & Schultz, Anne Marie (1999). The business to business customer in the service innovation
process. European Journal of Innovation Management, 2(2), 55–63. Martin, Claude R. (2000). The effects of advertising on adolescent smoking behavior. In S. B. Dahiya (Ed.), The current state of
business disciplines. Rohtak, India: Spellbound Publications. Sinha, Indrajit, & Batra, Rajeev (1999). Category price consciousness: Some antecedents and consequences. International
Journal of Research in Marketing, 16, 237–251. Terpstra, Vern (2000). The millennium and international marketing. International Marketing Review, 17(1).
Operations Management Anderson, S. W., Daly, J. D., & Johnson, M. F. (1999). Why firms seek ISO 9000 certification: Regulatory compliance or
competitive advantage? Production and Operations Management, 8(1), 28–43. Lovejoy, W. S., & Tsay, A. A. (1999). Quantity flexibility contracts and supply chain performance. Manufacturing and Service
Operations Management, 1(2), 89–111. Langevin, Andre, Riopel, Diane, & Stecke, Kathryn E. (1999). Transfer batch sizing in flexible manufacturing systems. Journal
of Manufacturing Systems, 18(2), 140–151.
Organizational Behavior and Human Resource Management Tichy, Noel M. (1999). The growth imperative. Leader to Leader, 24–29. Weiss, Janet A., & Piderit, Sandy (1999). The value of mission statements in public agencies. Journal of Public Administration
Research and Theory, 9(2), 193–223.
Statistics and Management Science Lenk, Peter J. (1999). Bayesian inference of semiparametric regression using a Fourier representation. Journal of the Royal
Statistical Society, 61, 863–879. Lenk, Peter J., Wedel, Michel, Kamakura, Wagner, Arora, Neeraj, Bemmaor, Albert, Chiang, Jeongwen, Elrod, Terry, Johnson,
Rich, Neslin, Scott, & Poulsen, Carsten Stig (1999). Discrete and continuous representations of unobserved heterogeneity in choice modeling. Marketing Letters, 10(3), 219–232.
firm survival in terms of the “human re- source value” or the degree to which indi- vidual firms valued people in relation to other assets. “Survival is the ultimate per- formance variable,” she says. With that first study, Welbourne launched what has be- come the largest database on IPO firms and their survival rates in the United States.
Of the companies that went public in 1988, Welbourne found only 60 percent were still in business in 1993. “We ran our analysis to see what predicted survival five years later and, to the surprise of many, the only thing that significantly predicted sur- vival was the HR value,” she says. “Firms high on that variable had a 92 percent chance of survival; firms with a low HR value had a 32 percent chance of survival.”
Paradoxically, the same factor that pre- dicted long-term survival—the HR value— had a negative effect on the firm’s initial stock price.
Welbourne knew she needed more data. She analyzed all the firms that went public in 1993 (535) and in 1996 (approx. 1,000). She and her team of researchers now are collecting data on 1999 IPO firms and plan to continue the research for firms going public in 2000 and beyond.
“I would love a database that has prospectus data every year from 1988 to the present and then continue. We could look at how companies change over time,” she says. “For instance, we could find out how man- agement teams change over time, how risk profiles have evolved, or when women show up on the executive teams (or as CEOs) and the roles they play on the executive team.”
Welbourne’s IPO database includes all IPO firms that went public in 1988, 1993, 1996 and 1999, making the sample repre- sentative of all industries, all sizes and all ages of firms. “These are not all dot com start-ups,” she says. “My work is really about high-growth organizations. The lessons learned are applicable to larger firms that are experiencing change.”
Welbourne’s research proves a direct cor- relation between employee satisfaction and overall organizational performance. To
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Paradoxically, the same factor that predicted long-term
survival—the HR value—had a negative effect on the firm’s
initial stock price.
continued on page 46
The University of Michigan Business School Courtyard has been trans- formed. Literally. And the inviting,
new setting bears the name of the couple who made this transformation possible: Keith E. and Valerie J. Alessi.
In part to mark his MBA Class of 1979’s twentieth anniversary, in part to support the Business School’s 75th Anniversary Challenge to improve the institution for fu- ture generations and in part to continue their personal commitment of giving to his alma mater, the Alessis donated $500,000 to completely renovate the courtyard.
“The creation of beautiful space is truly a wonderful thing,” Dean B. Joseph White told those assembled at the dedication of the Keith E. and Valerie J. Alessi Courtyard last October. “We just couldn’t be more grateful.”
The courtyard, which unites the exteri- ors of Davidson Hall with Kresge Library, Wyly Hall and the Paton Center, is bricked in red and gray with granite benches, new landscaping and lighting. The architectural firm Johnson, Johnson and Roy designed the area.
“When I was a student, I met all my friends in the courtyard,” Keith Alessi says. “All my best friends had last names that began with A through CRI. That’s how we were sectioned in those days.”
The Alessis live in Lexington, Virginia, and commute frequently to Ann Arbor for football games and other special events. Keith is chairman and CEO of TeleSpec- trum Worldwide Inc., a “traditional call center business,” as Alessi describes it, for a wide range of Fortune 1000 companies. Valerie is a commercial artist and watercol- orist. She runs a local art center and also is involved in several charities. The couple has two children.
“I’ve always pointed to my experience at the University of Michigan Business School as being the most important event in my life—it set me on course for life,” he says. “Doors were opened by virtue of the degree.”
Alessi came to Michigan as a scholarship student after completing his undergraduate degree at Wayne State University. The cou- ple married the summer between the first and second year of the MBA program. They lived in married student housing while Keith finished his MBA and Valerie her studies in art. “Val and I support causes that are meaningful to us, and education is a big one,” he continues. “Others helped us when we needed it and we believe there’s
an obligation to help the next guy in line. Some people can do it by giving their time, others with financial means.”
Since those early years, Keith Alessi has given his time as a member of the Alumni Board of Governors and as Master of Cere- monies at the annual Scholarship Dinner. He and Valerie also are generous donors. In 1998, they endowed a professorship bear- ing their name that is currently held by Brian Talbot, professor of operations man- agement and associate dean for Executive Education.
Keith Alessi is known as a “turnaround specialist.” In 1997, he was named president and CEO of Jackson Hewitt, a company now owned by HFS Corp. that offers tax preparation services to low-income Ameri- cans through a nationwide franchise net- work. With Alessi at the helm, the company’s stock climbed from $4.75 per share to $68 in a matter of months. The 13-fold increase made it the nation’s best-performing stock
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Everything’s Coming Up Roses Alessis Renovate the Courtyard
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for a company with a market capitalization of $100 million.
When Alessi joined TeleSpectrum in 1998, the stock value jumped 40 percent. The company provides multi-channel cus- tomer relationship management solutions; customer acquisition, retention and care programs; interactive voice response pro- motions; customer satisfaction measure- ment; and call center management for a variety of industries, including financial services, telecommunications, technology, insurance, utilities, health care and phar- maceuticals, and government entities.
“Our business hasn’t been considered glamorous in the past, but with the Web, big companies are recognizing they must provide service to those customers,” he says. “We put technology together with people.”
With the courtyard renovation, the Alessis are bringing people together on a daily basis at the University of Michigan Busi- ness School. “This is the first gift we received for the 75th Anniversary Chal- lenge,” says Gautam Kaul, associate dean and head of the challenge project, “and it probably will be the most everlasting.”
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O VAT I O N
Once completed, the Alessi Courtyard became an instant hit among students, faculty and staff. It is the new meeting ground of choice for the Business School—just as it was in Keith and Valerie’s day.
As a result of the generosity of many friends and admirers, the University of Michigan Business School is pleased to announce the establishment of the Gilbert and Ruth Whitaker Professorship. The professorship honors the couple
for their pivotal and long-lasting contributions to both the Business School and the University.
As dean of the Business School for nearly 12 years, Gil Whitaker is credited with transforming the institution, both intellectually and physically. Under his leadership, the breadth and quality of the faculty was expanded. As provost of the University of Michi- gan, he spearheaded the rebuilding of central campus and instituted a new financial management system that modernized and streamlined the University’s infrastructure.
Through these challenges and achievements, Ruth Whitaker served as a hands-on silent partner, investing considerable time and talent in the realization of Business School and University goals. Within the Ann Arbor community, she made things happen too, holding leadership roles at the Genealogical Society of Washtenaw County, the Ann Arbor Women’s City Club, the Thrift Shop Association of Ann Arbor, the Ann Arbor Sum- mer Festival, the Ann Arbor Area Community Foundation, St. Joseph’s Hospital, Matthaei Botanical Gardens and Nichols Arboretum.
“As dean and provost, Gil made many truly outstanding contributions to our commu- nity,” says Dean B. Joseph White. “Ruth was an incredibly active and supportive part- ner in all that Gil achieved. Without question, the University of Michigan and its Busi- ness School is a much better institution as a result of the Whitakers’ accomplishments.”
A lasting way to pay tribute to outstanding individuals is to name a professorship in their honor. The Gilbert and Ruth Whitaker Professorship honors its namesakes in per- petuity, will reward a faculty member for excellence in his or her field and furthers Gil Whitaker’s greatest wish and constant priority—to continually build a better faculty.
Those interested in contributing to the endowment for the Gilbert and Ruth Whitaker Professorship should contact Frank Wilhelme, assistant dean for development, at 734- 763-5775 or fcwilh@umich.edu.
Alumni and Friends Honor Gilbert and Ruth Whitaker
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Introducing UMBS Marketplace, a new place to shop for distinctive gifts, clothing and business items from
the University of Michigan Business School
The Mark of a Leader
It’s easy to order. Just call toll free 1-877-976-9504 or visit our web site at www.bus.umich.edu/alumni/UMBSmarket
POLO SHIRT Herringbone polo in 90% cotton,10% polyester, 7-oz weight. Gray heather with royal trim and color logo.
PH100A Adult sizes M, L, XL $39.99 XXL $42.99
UMBRELLA With 48" arc, wood handle and metal shaft. White and royal with color logo.
UB100A $29.99
SPORTS HAT Brushed twill with an adjustable brass-back closure. Natural with royal bill and color logo.
SH100A $14.99
TRAVEL MUG 14 oz. Aladdin unbreakable mug with double wall vacuum insulation. Closure lid to resist spills. Contemporary brushed stainless steel exterior with black logo.
MG100A $19.99
SWEATSHIRT 80/20, 9 oz. tipped crewneck. Striped jacquard neck, cuffs and waistband. Oversized fit. Gray heather with black trim and color logo.
SWS100A Adult sizes M, L, XL $45.00 XXL $47.00
PEN “Cap-off” rollerball style. Solid brass cap and barrel, silver finish with goldtone accents. Laser engraved. Black ink.
PN100A $19.99
WIND SHIRT 100% microfiber. Water-resistant, nylon-lined. Overlap v-neck striped collar. Rib knit trim. Navy with sand trim, color logo.
WS100A Adult sizes M, L, XL $59.00 XXL $64.00
LEATHER PORTFOLIO Top grain leather portfolio with padded cover. Inside pocket for documents and business cards, pen loop and paper pad. Black leather with embossed logo.
LP100A $49.99
The UMBS Marketplace program is proudly sponsored by Alumni Relations. All proceeds go directly to support alumni and student programs at the School.
T-SHIRTS Fruit of the Loom, 100% pre-shrunk cotton. White with color logo.
TSA100A Adult sizes M, L, XL $9.99 XXL $12.49 TSY200A Youth sizes 2-4, 6-8, 10-12, 14-16 $6.99
“Give Me Equity Or Give Me Death!” Jeff Rich, BBA’82
Jeff Rich epitomizes the en- trepreneurial spirit.
At age 29, while at Citibank in 1989, he raised $8 billion in five days to finance one of the largest attempted takeover bids in Wall Street history—Para- mount Communications’ hos- tile raid of Time/Warner. But Rich wasn’t satisfied. “Being a Midwesterner, I knew I didn’t want to raise a child in Man- hattan,” Rich says. He also knew the opportunity he wanted most—to build a com- pany from the ground up— would elude him as long as he remained at Citibank. The other challenge for Rich was to create equity for himself and his family.
So he left a skyrocketing ca- reer at Citibank to become senior VP and CFO of Affili- ated Computer Services Inc. (ACS), a fledgling data proc- essing firm catering to the banking industry in Dallas. “I’ve never known anyone to get rich on a salary and a bonus. If you want to get truly wealthy, you have to have equity and that’s why I went to ACS. I looked around and decided I would rather be a customer of the bank than be the bank, because the custom- ers have more money. I also wanted to get some operating experience; to see what life was like on the other side and really try to build something and make a difference.”
In 1989 ACS derived more than 80 percent of its annual revenue from banks or thrifts— frightening in light of the fact that between 1988 and 1995
Texas lost more than 400 banks and 130 thrifts to fail- ures. “I was going to join this great computer services man- agement team that had just started a new company to build a big bank data-process- ing company. Little did I know that the Texas banking market was going to just die…fast! It was a death watch. At that point, I was too naïve, too stu- pid, to be scared.” Yet, Rich stayed with ACS, and through diversification and entrepre- neurial spirit, ACS thrived. In 1995, he was named president and CEO.
When asked why he chose to go with ACS, Rich credits a Citibank colleague’s advice: “Whenever you have a new op- portunity, walk through the door because you can always go back and do what you know how to do.” When asked why he stuck with ACS through tough times: “One of my Busi- ness School professors also said the best time to grab market share is in a down economy. We are all loyal creatures and we remember those who help us when we are down. That same philosophy works very well in business relationships.”
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Currently, ACS is one of the largest system integration firms in the country and the second- largest operator of automated teller machines outside the banking industry.
Whenever you have a new opportunity,
walk through the door because you can
always go back and do what you know
how to do.
ACS went public in 1994 and its stock has outperformed that of archrival EDS. Its port- folio has expanded, acquiring more than 40 companies and extending its reach into every- thing from healthcare to tele- communications to govern- ment. ACS now employs more than 17,000 workers. Jeff is convinced that ACS can take on some of the glamour of its dot.com rivals. “Our goal is to be perfect in quality and to drive more and more quantity. That’s what our business is all about—how to perform serv- ices cheaper and better. To keep the entrepreneurial spirit alive, we always remind our- selves that we are a service firm and clients are the reason we are in business…they pay our wages, they give us money to do things, and what we do for them is whatever it is they want us to do for them. That’s the way you build long-term successful client relationships.”
Looking back, Rich doesn’t view leaving Citibank as a big risk. “I never really thought about what fostered or en- dangered my entrepreneurship. One of the nice things about Citibank was that I got to meet a lot of great CEOs. They all are independent thinkers, strong decision-makers and good consensus builders. They do a million things pretty well, but the main thing they do is
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trust their instincts, and they don’t necessarily worry too much about following the crowd. Usually, when you fol- low the crowd, you get what the rest of the crowd gets— and that’s average.”
To Rich, “The far bigger risk in life is not to chase your dreams. Life is short. You have to love what you do and you must have passion for it. And if it’s not there, you have to find it because life is way too short , and it’s never too late. You can be 55 and become an entre- preneur. Is it possible to be an entrepreneur at age 60 today? You bet! I have a great life. Are you kidding me? I’m the lucki- est guy on the planet!”
In the Swing of Things Elaine P. Crosby, BBA ’80
When Elaine Crosby was growing up in nearby Jackson, her brother attended the Uni- versity of Michigan and her parents had tickets for all the games. “Michigan was the only school I applied to,” says Crosby. “My dad was in sales, and I was always interested in business but didn’t know what actually would happen.” Crosby played on the tennis team for two years and then joined the golf team, not realiz- ing at the time that this deci- sion would eventually lead to a rewarding career in the Ladies Professional Golf Association.
“I’d been around golf a lot as a child but hadn’t really played much when I decided to join the Michigan team,” says the all-around athlete. “As gradua- tion approached, I went through the interview process but didn’t have experience with
internships and such because my sports activities precluded those opportunities. In 1980, times were tough in Michigan so I moved to Arizona.”
Crosby stayed in Arizona for only four months. Golf had be- come her passion and she de- cided to return to Jackson. “I played in many amateur tour- naments then went to Florida and played some mini-tour events as an amateur,” explains Crosby. “The pro from Jackson was in Florida, and I worked with him. Another friend was a pro in Saginaw, so I went there in the summers of 1982 and 1983.” In between, she again played the mini-tour in Florida. “I played the full year on the mini-tour in 1984, got my tour card in fall 1984 and
joined the LPGA in 1985,” says Crosby.
Crosby ranks 42nd on the career list in earnings with two tournament wins—in 1989 and in 1994. Her best year was 1994 when she finished 11th in the standings with a 71.93 scoring average and earnings of $344,735. “My athletic en- deavors have given me the self- discipline to manage my fi- nances,” says Crosby. “My degree helped me get on the LPGA executive committee, where I was involved in busi- ness, budget and pension af- fairs.” Crosby served as vice president in 1993, president in 1994 and remained on the committee through 1998.
Since then Crosby has been playing 26 to 32 tournaments per year, but is backing off and will play maybe 15 tourna- ments this year. “At 41, I’m semi-retiring from the tour, but
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everyone is different when they reach this point. If I’m making lots of money, maybe I won’t retire, but that takes a lot of work. The top players are playing the same as they did five or 10 years ago, but the 50th player is just so much better than five years ago, and that makes it difficult. With Title IX, it took this long to re- ally kick in,” she explains.
My degree helped me get on the LPGA
executive committee, where I was involved in
business, budget and pension affairs.
Crosby is looking at other opportunities. “I want my own company, and might aim to- ward the Internet. It may or may not be golf related. An- other possibility is a senior tour. There is none in the LPGA, but there is some activity by play- ers to create one. I’ve also kept in close contact with people I’ve played with, have many corporate contacts, am a part- ner in a marketing company owned by my brother and might even start broadcasting. I have the enormous luxury of not having to rush to look for something,” she says. “I take the opportunities that come my way and try to make the best of them.”
Crosby explains champions put a lot of pressure on them- selves, and the ability to handle that pressure sets them apart. “That’s just an inherent trait. It’s not necessarily that the physical abilities are different, there is just so much more of a mental challenge compared to the physical challenges at the top level of sports.”
In typical Michigan style, Crosby is, indeed, a champion.
By Fred P. Wessells
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Some came for the professional development seminars. Others came to socialize. Most graduates of the University of Michigan Business School came back for both.
Reunion ’99, October 21–24, proved to be the biggest, most-well-attended re- union in the school’s 75-year history. A star-studded line-up of Michigan faculty led professional development classes that were filled to capacity months in advance and required more sections to be added. In total, 10 professional development seminars and two panel discussions were offered.
C.K. Prahalad, the Harvey C. Fruehauf Professor of Business Administration and a favorite among students past and present, kicked off the weekend with his keynote lecture, “Competing in the New Economy.”
Learning and Laughing,
Michigan-StyleLearning and Laughing,
Michigan-Style
This event drew far more than the 800-seat Hale Auditorium could accom- modate. Alumni, current students and staff overflowed onto the stairs and clustered at the doo